EuroCham slightly increases confidence in local economy
Business confidence and outlook among European businesses in Vietnam has stabilised and shown a modest increase after a steep 11-point drop in the last quarter of 2011, a recent report by the European Chamber of Commerce in Vietnam (EuroCham) has shown.
EuroCham's sixth quarterly report, released Wednesday, shows that the Business Climate Index increased by 4 points to 56, with 38 percent of respondents assessing their current business situation as 'neutral,' slightly down from 45 percent in the last survey.
Meanwhile, a 'good' or 'excellent' view of their current business situation was held by 36 percent of respondents, up slightly from 32 percent last quarter, but still much lower than the 64 percent who were content with their current business situation this time last year, the report said.
"The number of businesses having a negative view on their current situation has remained nearly unchanged since last quarter, but at 26 percent, it is 14 percentage points higher than a year ago," it stated.
The survey, titled EuroCham Business Climate Index survey, was conducted in January 2012, with 40 percent of the respondents active in the services industry, about a quarter in each manufacturing and trading and the rest in other activities.
"The slight increase of the EuroCham Business Climate Index at 56 points shows a halt in the downward trend in business confidence we have seen in 2011," commented EuroCham Chair Alain Cany on the survey.
"However, the business confidence is still far below last year's level. This shows that uncertainty amongst investors remains. Key structural issues have not been resolved such as privatisation of state owned enterprises and stabilising the macroeconomic environment to name two examples."
Brighter business outlook
Respondents to the survey also showed slight optimism in their business outlook for 2012, or the Year of Dragon according to the Lunar calendar.
Nearly 40 percent of businesses stated a 'good' or 'excellent' outlook, which is a 12 percent increase from last quarter. However, the rate is far lower than the 72 percent recorded during the same period last year, the report said.
Meanwhile, 25 percent respondents had a pessimistic outlook for business in the second half of this year.
Asked for an expected percent of VND depreciation in 2012, most of the respondents replied with the rate of 8.33 percent, while 53 percent of companies expect inflation to have a significant impact on their business. Only 8 percent stated that inflation was "actually threatening their business in the country."
Upwards trend expected for macroeconomic uncertainties
Regarding the macroeconomic uncertainties in Vietnam, a significant 65 percent of respondents expect the difficult macroeconomic situation in Vietnam to worsen further, while 35 percent expect the situation to stabilise and gradually improve.
"This shows an underlying uncertainty by investors about the fate of the Vietnamese economy," the report stated.
Asked whether the current economic crisis in Europe is affecting their company's decision to invest in Vietnam, 55 percent stated that the crisis affected them, although most of them stated a 'slight' effect.
On the contrary, the survey showed that 44 percent said the crisis in Europe does not affect their decision to invest in Vietnam at all.
Meanwhile, when asked whether corruption had ultimately reduced or delayed their investment in Vietnam, 34 percent of respondent said that corruption had 'significantly' reduced or delayed their investment in Vietnam, a 6 percent increase from the last quarter, while 25 percent said corruption had not affected them at all.
This indicates that corruption is still a serious problem and features prominently in investors' consideration the country, EuroCham stated in its report.
Tuoi Tre - February 4, 2012